Remain long on Nifty with a stop loss at 11,000: HDFC Securities

Nandish Shah

After two days of consolidation, the Nifty50 resumed its upward journey and surged 132 points to close at 11,168 on March 11.

During the last week, the index had broken out from the consolidation range of 10,690 to 11,000, which held for the last 15 weeks.

The index is currently trading above its 20, 50, 100 and 200-Day SMA. Oscillators and indicators like DMI and MACD have turned bullish on daily as well as weekly charts.

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The immediate resistance for the Nifty is seen at 11,345, which happens to be 76.4 percent Fibonacci retracement of the fall seen from the all-time high 11,760 (August 2018 high) to 10,004 (October 2018 bottom). Support is now shifted upward to 11,000, which was acting as resistance earlier.

The Bank Nifty gained 0.74 percent to close at 27,966. Bank Nifty is only 1.5 percent away from its all-time high of 28,388, registered in August 2018. It is trading above all important moving averages, which indicates bullish setup for medium to long-term.

Bank Nifty formed a bullish flag candlestick pattern on the weekly charts, which indicates a continuation of a primary uptrend after small correction.

"Flag" pattern projects the upside target at 30,400 in Bank Nifty, which is still at 9 percent distance from the current levels.

From the bottom of Feb 19, 2019, the Nifty Midcap and Smallcap indices have risen 10.5 percent and 15 percent respectively, while Nifty gained 5 percent in the same period.

In the derivatives also, we have seen the build-up of long positions in Nifty and Bank Nifty futures. FIIs created fresh longs in both index futures and options segment last week. Amongst the options, Put writing is seen at 10,900-11,000 levels.

Considering the technical and derivative evidence discussed above, we believe that one should remain optimistic in the Nifty with the stop loss of 11,000.

Moreover, considering that the Nifty has not gone anywhere in the past three series and we began the march month with lowest open interest in stock futures segment for the last 22 months, we expect the Nifty to reach even 11,500 in the coming days. Midcap and Smallcap Indices are likely to outperform the Nifty. Fish where the fishes are!

Here are three stocks that could give 8-10 percent return in the next 1 month:

Jubilant Foodworks: Buy| LTP: Rs 1,372| Target Rs 1,480 | Stop loss: Rs 1,310 | Upside: 8 percent

Jubilant Food gave a bullish breakout from the symmetrical triangle pattern on the daily chart by closing above the resistance level of Rs 1,365.

The stock price is trading above its 5, 20 and 200-day SMA indicating a bullish trend for the short as well as medium term.

Oscillators and momentum indicators have turned bullish on the daily as well as weekly charts. Therefore, we recommend buying Jubilant Food for the target of Rs 1,480 and keep a stop loss at Rs 1,310.

Torrent Power: Buy| LTP: Rs 257| Target: Rs 280| Stop loss: Rs 243 | Upside: 9 percent

After taking support near its 200-day moving average for the last two days, Torrent Power has broken out on the daily chart by closing above the resistance level of Rs 254.

The primary trend of Torrent Power is bullish where the stock price is trading above its 20, 50 and 200-day SMA.

Momentum indicators and oscillators like RSI and MACD are showing strength on the daily charts. In the derivatives, we have seen long build up in the Torrent Power futures.

Therefore, we recommend buying Torrent Power at CMP of Rs 257 and average at Rs 252 for the target of Rs 280 and keep a stop loss at Rs 243.

Century Ply: Buy| LTP: Rs 193| Target: Rs 212 |Stop loss: Rs 180| Upside: 10 percent

After forming multiple bottoms around Rs 160 last month, Century Ply broke out on the daily chart on March 11 by closing above the resistance level of Rs 190 to close at a five-month high.

The stock price is trading above its 5 and 20-day SMA, indicating bullish trend for the short to medium-term.

Oscillators and momentum indicators are also showing strength in the stock. Therefore, we recommend buying Century Ply for the target of Rs 212 and keep a stop loss at Rs 180

The author is Senior Technical & Derivatives Analyst, HDFC Securities.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. First Published on Mar 12, 2019 11:43 am